Washington State Bankruptcy Homestead Exemption
On 7/22/2007 the Washington State Bankruptcy Homestead was raised to $125,000.
While there are a few exceptions, the bottom-line is that you can save $125,000 of the equity in your home. (there are some issues at the edges that we can help you deal with.) But if you take the market value of your home right now and subtract all of the mortgages in total, this is what you can hold onto even through bankruptcy. The point of argument surrounds what you could actually get for your home in our local market. If you a professional appraisal great. The Trustee in your bankruptcy case may accept it if it is recent. But he/she may also ask for their own appraisal which they often do. The Trustee's main job is to collect your available assets which are not reasonably classified as exempt and liquidate them and give them to creditors.
So what if you have more than $125,000? You may need to work out a deal with the trustee to pay the difference once you agree on what that is. There are options.
If you are under the $125,000 by a substantial amount, we can help you forcefully document this so that your case slides through fast and without unnecessary review.
Read a full copy of the new law in printable .PDF form here, or view the bottom of this page.
While this is extremely helpful, the same issues that used to prevent them will continue to arise:
||Is your appraisal valid? i.e. too low depriving the Trustee of a reasonable estimate of your equity value.
||What is your true full debt on the home and is that debt valid?
||Are some of your creditor entitled to some of the equity given the nature of their claims?
SUBSTITUTE HOUSE BILL 1805 60th Legislature 2007 (bold=most important key sections, but the other sections may limit applicability in your case)
Regular Session Passed by the House April 17, 2007 Yeas 85 Nays 13 Speaker of the House of Representatives Passed by the Senate April 11, 2007 Yeas 48 Nays 1 President of the Senate
CERTIFICATE I, Richard Nafziger, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is SUBSTITUTE HOUSE BILL 1805 as passed by the House of Representatives and the Senate on the dates hereon set forth. Chief Clerk Approved Governor of the State of Washington FILED Secretary of State State of Washington
_____________________________________________ SUBSTITUTE HOUSE BILL 1805 _____________________________________________ AS AMENDED BY THE SENATE Passed Legislature - 2007 Regular Session State of Washington 60th Legislature 2007 Regular Session By House Committee on Judiciary (originally sponsored by Representatives Morrell, Lantz, Linville, Wallace, Rodne, Conway, Kessler, Hudgins, Hunt, Chase, Hasegawa, VanDeWege, Campbell, Ericks, Green, Simpson and Schual-Berke)
READ FIRST TIME 02/23/07. 1 AN ACT Relating to increasing the homestead exemption amount; and 2 amending RCW 6.13.030, 6.13.080, and 6.13.090. 3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON: 4 Sec. 1. RCW 6.13.030 and 1999 c 403 s 4 are each amended to read 5 as follows:
6 A homestead may consist of lands, as described in RCW 6.13.010, 7 regardless of area, but the homestead exemption amount shall not exceed 8 the lesser of
(1) the total net value of the lands, manufactured homes, 9 mobile home, improvements, and other personal property, as described in 10 RCW 6.13.010, or
(2) the sum of one hundred twenty-five thousand dollars in the case of lands, manufactured homes, mobile home, 12 and improvements, or the sum of fifteen thousand dollars in the case of 13 other personal property described in RCW 6.13.010, except where the 14 homestead is subject to execution, attachment, or seizure by or under 15 any legal process whatever to satisfy a judgment in favor of any state 16 for failure to pay that state's income tax on benefits received while 17 a resident of the state of Washington from a pension or other 18 retirement plan, in which event there shall be no dollar limit on the 19 value of the exemption. p. 1 SHB 1805.PL 1 Sec. 2. RCW 6.13.080 and 2005 c 292 s 4 are each amended to read 2 as follows: 3 The homestead exemption is not available against an execution or 4 forced sale in satisfaction of judgments obtained: 5 (1) On debts secured by mechanic's, laborer's, construction, 6 maritime, automobile repair, materialmen's or vendor's liens arising 7 out of and against the particular property claimed as a homestead; 8 (2) On debts secured (a) by security agreements describing as 9 collateral the property that is claimed as a homestead or (b) by 10 mortgages or deeds of trust on the premises that have been executed and 11 acknowledged by the husband and wife or by any unmarried claimant; 12 (3) On one spouse's or the community's debts existing at the time 13 of that spouse's bankruptcy filing where (a) bankruptcy is filed by 14 both spouses within a six-month period, other than in a joint case or 15 a case in which their assets are jointly administered, and (b) the 16 other spouse exempts property from property of the estate under the 17 bankruptcy exemption provisions of 11 U.S.C. Sec. 522(d); 18 (4) On debts arising from a lawful court order or decree or 19 administrative order establishing a child support obligation or 20 obligation to pay spousal maintenance; 21 (5) On debts owing to the state of Washington for recovery of 22 medical assistance correctly paid on behalf of an individual consistent 23 with 42 U.S.C. Sec. 1396p; ((or)) 24 (6) On debts secured by a condominium's or homeowner association's 25 lien. In order for an association to be exempt under this provision, 26 the association must have provided a homeowner with notice that 27 nonpayment of the association's assessment may result in foreclosure of 28 the association lien and that the homestead protection under this 29 chapter shall not apply. An association has complied with this notice 30 requirement by mailing the notice, by first class mail, to the address 31 of the owner's lot or unit. The notice required in this subsection 32 shall be given within thirty days from the date the association learns 33 of a new owner, but in all cases the notice must be given prior to the 34 initiation of a foreclosure. The phrase "learns of a new owner" in 35 this subsection means actual knowledge of the identity of a homeowner 36 acquiring title after June 9, 1988, and does not require that an 37 association affirmatively ascertain the identity of a homeowner. SHB 1805.PL p. 2 1 Failure to give the notice specified in this subsection affects an 2 association's lien only for debts accrued up to the time an association 3 complies with the notice provisions under this subsection; or 4 (7) On debts owed for taxes collected under chapters 82.08, 82.12, 5 and 82.14 RCW but not remitted to the department of revenue. 6 Sec. 3. RCW 6.13.090 and 1988 c 231 s 4 are each amended to read 7 as follows: 8 A judgment against the owner of a homestead shall become a lien on 9 the value of the homestead property in excess of the homestead 10 exemption from the time the judgment creditor records the judgment with 11 the recording officer of the county where the property is located. 12 However, if a judgment of a district court of this state has been 13 transferred to a superior court, the judgment becomes a lien from the 14 time of recording with such recording officer a duly certified abstract 15 of the record of such judgment as it appears in the office of the clerk 16 in which the transfer was originally filed. A department of revenue 17 tax warrant filed pursuant to RCW 82.32.210 shall become a lien on the 18 value of the homestead property in excess of the homestead exemption 19 from the time of filing in superior court. --- END --- p. 3 SHB 1805.PL